Is  Railroad 
Regulation 
Becoming 
Strangulation  ? 

by 

IVY  L.  LEE 

Executive  Assistant 
Pennsylvania  Railroad  Company 


Address  before 
Men’s  League  of 
Highland  Park  Church 
New  Brunswick,  N.  J. 
November  20,  1914 


Il  16  1932 

^ * 

Is  Railroad  Regulation  Becoming 
Strangulation  ? 

The  railroads  in  this  country  are  caught  in  a 
vise  which  is  being  screwed  tighter  and  tighter. 
Railroads  do  not  oppose  proper  regulation,  but 
is  it  not  time  to  inquire  whether  regulation  is 
not  gradually  becoming  strangulation?  Many  are 
the  signs  now  that  the  grip  of  cumulative  regu- 
lation is  slowly  but  surely  squeezing  out  the  life- 
blood of  what  President  Wilson  has  called  “the 
one  common  interest  of  our  whole  industrial 
life;”  that  it  is  scotching  initiative  and  enter- 
prise; and  that  it  is  undermining  the  ability  of 
the  railroads  to  provide  for  future  public  needs. 

In  our  treatment  as  a people  of  the  railroad 
question  we  are  obeying  literally  the  scriptural 
injunction:  “Take  no  thought  for  the  morrow.” 
“The  railroad  is  here,”  we  reason ; “it  cannot 
run  away;  let  us  get  all  we  can  out  of  it  now, 
because — may  be,  its  stock  is  watered !” 

Mr.  Prouty  said  before  the  National  Asso- 
ciation of  Railway  Commissioners  in  Washing- 
ton on  Wednesday:  “Grave  doubts  exist  as  to 
whether  rates  must  not  be  generally  increased.” 
And  then  he  added,  “The  question  cannot  be 
satisfactorily  answered  until  there  is  a national 
valuation  of  these  properties.”  And  Mr.  Prouty 
himself  predicted  that  this  valuation  would  not 
be  arrived  at  until  1919. 

Regulation  of  railroads — so  eminently  desir- 
able when  proper  and  not  merely  political — was 
i ; originally  to  prevent  discrimination  and  oppres- 
sion. In  no  respect  is  anything  else  intended 
now,  but  the  cumulative  effect  of  laws  and  com- 
mission activities  is  that  this  device  of  states- 
manship is  being  converted  into  an  instrument 
of  torture.  In  what  manner  that  is  true  may 
be  realized  from  the  following: 


Many  States  insist  upon  approving  the  terms 
of  security  issues. 

New  Jersey  insists  that  grade  crossings  shall 
be  removed  at  the  sole  expense  of  the  railroad. 
At  the  meeting  of  the  National  Association  of 
Railway  Commissioners  in  Washington,  on 
Thursday,  Commissioner  Hall,  of  Nebraska,  is 
reported  to  have  urged  that  “a  concerted  effort 
should  be  made  by  all  Commissioners  in  all 
States  that  grade  crossings  should  be  eliminated 
at  no  matter  what  cost  to  the  railroads.”  To  i 
remove  all  the  grade  crossings  in  the  United 
States  would  probably  cost  $5,000,000,000 — one- 
third  of  the  present  total  investment  in  our  rail- 
roads. 

Commissions  may  order  improved  stations  and 
the  installation  of  signals ; they  may  tell  you 
where  you  must  and  when  you  cannot  stop  a 
passenger  train. 

They  pass  upon  the  quality  of  the  locomotive 
boiler;  they  prescribe  the  character  of  headlight;  i 
they  stipulate  the  kind  of  ash-pan;  and  the  State 
of  Indiana  has  now  decreed  that  an  automatic 
door  be  used  on  the  locomotive  fire-box. 

The  law  sets  forth  where  the  ladders,  bars  and 
other  safety  devices  shall  be  placed  on  freight 
cars. 

Commissions  decree  whether  on  mountain 
grades  you  shall  use  hand  brakes,  holding  the 
air  brakes  in  reserve,  or  air  brakes,  holding  the  j 
hand  brakes  in  reserve. 

Federal  laws  stipulate  the  number  of  hours 
men  shall  work;  States  tell  you  how  often  you 
must  pay  your  men,  and  many  State  laws  fix  the  ; 
number  of  men  in  a train  crew. 

The  process  of  manufacture  of  steel  rails  and 
the  kind  of  ties  used,  are  still  matters  for  which 
railroad  officers  are  responsible,  but  at  the  meet- 
ing in  Washington  an  Interstate  Commerce  Com- 


missioner  called  attention,  as  to  an  omission  re- 
quiring repair,  to  the  fact  that  “railway  material 
is  in  general  notable  for  its  exemption  from  all 
supervision  of  any  kind — State  or  Federal.” 


There  is  pending  in  Congress  a law  limiting 
the  number  of  freight  cars  which  may  be  hauled 
with  one  locomotive.  At  the  meeting  of  Com- 
missioners in  Washington,  a committee  recom- 
mended that  the  Interstate  Commerce  Commis- 
ion  be  given  full  authority  to  prescribe  “the 
:haracter  of  equipment  to  be  used  in  interstate 
:ommerce,  also  authority  to  prescribe  the  man- 
ler  of  using  or  hauling  same.” 

And  the  most  amazing  feature  of  this  whole 
process  is  that  actual  experience  in  the  success- 
ful conduct  of  railroad  affairs  apparently  dis- 
qualifies a man  from  appointment  to  a railroad 
:ommission. 

In  1913  nearly  1400  laws  regulating  rail- 
oads  were  introduced  in  42  State  legislatures, 
n 1914  only  14  legislatures  were  in  session,  but 
236  new  railway  bills  were  proposed.  Of  these, 
.12  provided  for  some  mandatory  concessions 
o employes. 


Arbitration  commissions  establish  the  rates  of 
wages  which  shall  be  paid  to  employes,  but  as- 
sume no  responsibility  for  obtaining  the  money 
with  which  to  pay  them. 


Local  authorities  assess  railway  taxes,  but  these 
authorities  have  no  power  to  help  the  railroads 
assess  charges  out  of  which  to  pay  these  taxes. 
On  the  Pennsylvania  Railroad  in  the  past  four- 
een  years  total  wage  payments  increased  160 
ier  cent,  and  taxes  increased  over  200  per  cent. 

! Perhaps  expenditure  for  all  these  purposes  is 
lesirable,  but  it  is  certain  that  it  cannot  be  made 
iinless  the  railroads  receive  higher  charges  for 
the  services  they  render — and  the  railroad  com- 


pany  is  concerned  only  that  returns  as  a whole  * 
shall  be  adequate. 

Nevertheless,  a non-political  Congressional  I 
Committee  reports  that  the  railroads  are  under- 
paid for  carrying  the  mails,  but  Congress  takes  ; 
no  steps  to  provide  the  additional  money. 

Many  States  arbitrarily  limit  both  freight  and 
passenger  rates.  But  even  where  that  is  not  4 
done,  higher  rates  can  only  be  obtained  with  the 
sanction  of  railway  commissions. 

Thus  hemmed  in  between  Scylla  and  Charyb- 
dis,  the  railroads  have  run  aground  on  a long- 
charted  and  well-known  rock  known  as  the 
arithmetic  table.  In  concrete  form  this  is  how 
the  danger  has  manifested  itself : 

During  the  four  years  from  June  30,  1910,  to 
June  30,  1914,  the  thirty-five  railroad  systems 
east  of  the  Mississippi  and  north  of  the  Ohio  I] 
River  expended  for  improvements  nearly  $900,-  j 
000,000.  Yet,  such  was  the  increased  expense  of  i 
handling  business  that  in  the  fiscal  year  1914 
these  railroads  earned  net  operating  income  less 
by  $90,000,000  than  in  1910,  before  that  cash  in- 
vestment had  been  made. 

Must  it  not  be  apparent  that  had  investors  in 
the  past  realized  the  treatment  they  were  to  re- 
ceive, they  would  not  have  provided  the  money 
for  the  building  and  development  of  our  rail- 
roads ? 

And  as  the  money  for  future  railroad  develop- 
ment must  be  supplied  by  private  capital,  is  it 
not  time  that  we  took  some  thought  for  the 
morrow? 


